Elron Electronic Industries Second Quarter Results.Business Editors TEL AVIV Tel Aviv (tĕl əvēv`), city (1994 pop. 355,200), W central Israel, on the Mediterranean Sea. Oficially named Tel Aviv–Jaffa, it is Israel's commercial, financial, communications, and cultural center and the core of its largest , Israel--(BUSINESS WIRE)--Aug. 7, 2002 Elron Electronic Industries Ltd. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ELRN) today reported a net loss of $15.2 million, or $0.59 per share, for the second quarter of 2002 compared to a net loss of $11.1 million, or $0.52 per share, in the second quarter of 2001. The net loss in the first six months of 2002 amounted to $23.4 million, or $1.0 per share compared to a loss of $21 million or $0.99 per share in the first six months of 2001. During the second quarter of 2002, Elron completed the merger with Elbit and the share purchase of DEP DEP Deposit DEP Deputy DEP Department of Environmental Protection DEP Dependent DEP Departure DEP Depot DEP Deposition DEP deployed (US DoD) DEP Data Execution Prevention (computer security) . As a result, Elron's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the second quarter include six additional consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: companies and eight additional companies accounted for under the equity method of accounting. These transactions resulted in a significant increase in Elron's shareholders equity. In addition, Elron recorded a one time write down of certain holdings and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs. Factors contributing to Elron's results in the second quarter of 2002 and operational highlights: Elron's second quarter results were affected by the general market conditions which limited Elron's ability to complete successful exits and as a result, in the second quarter and the first six months of 2002, Elron had no meaningful gains from exits. In addition, Elron's second quarter results were affected by the completion of the merger with Elbit and the share purchase of DEP: - Elron Software's revenues in the second quarter amounted to $ 2.4 million, 26% higher than its revenues in the first quarter. Operating losses in the second quarter of 2002 (excluding the effect of amortization of intangible assets, deferred compensation and restructuring charges) were reduced to $ 1.4 million from $ 2.2 million in the first quarter of 2002 and from $1.7 million in the second quarter of 2001. - Elron Telesoft reported its second consecutive quarter of operating breakeven and positive EBITDA (excluding the effect of amortization of intangible assets and restructuring charges) as compared to an operating loss of $1.6 million in the second quarter of 2001. - NetVision continued to improve its performance, reporting, in the second quarter of 2002, net income of $1.4 million as compared to a net loss of $ 2.7 million in the second quarter of 2001. - Mediagate's net losses were reduced in the second quarter of 2002 to $0.8 million from $2.2 million in the second quarter of 2001 and a loss of $1.4 million in the first quarter of 2002. In August 2002, Elron increased its holding in Mediagate to 68%. - Given Imaging (Nasdaq: GIVN) recorded revenues of $7.2 million in the second quarter of 2002 - its third full quarter of sales. Following the share purchase of DEP, Elron holds directly and indirectly 19.7% in Given Imaging. Most of Elron's affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. showed improvement in their operational results in the second quarter of 2002: - Elron Software's revenues in the second quarter amounted to $ 2.4 million, 26% higher than its revenues in the first quarter. Operating losses in the second quarter of 2002 (excluding the effect of amortization of intangible assets, deferred compensation and restructuring charges) were reduced to $ 1.4 million from $ 2.2 million in the first quarter of 2002 and from $1.7 million in the second quarter of 2001. - Elron Telesoft reported its second consecutive quarter of operating breakeven and positive EBITDA (excluding the effect of amortization of intangible assets and restructuring charges) as compared to an operating loss of $1.6 million in the second quarter of 2001. - NetVision continued to improve its performance, reporting, in the second quarter of 2002, net income of $1.4 million as compared to a net loss of $ 2.7 million in the second quarter of 2001. - Mediagate's net losses were reduced in the second quarter of 2002 to $0.8 million from $2.2 million in the second quarter of 2001 and a loss of $1.4 million in the first quarter of 2002. In August 2002, Elron increased its holding in Mediagate to 68%. - Given Imaging (Nasdaq: GIVN) recorded revenues of $7.2 million in the second quarter of 2002 - its third full quarter of sales. Following the share purchase of DEP, Elron holds directly and indirectly 19.7% in Given Imaging. Liquidity and Shareholders Equity As of June June: see month. 30, 2002, Elron had cash and other liquid instruments of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $114 million. Bank loans to wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. amounted to $67.4 million. Elron's financial position enabled Elron to continue Elron's investment activity and, in the second quarter of 2002, $11.1 million was invested by Elron in Elron's group companies to secure their cash needs for future growth. Following the merger with Elbit and the share purchase of DEP, Elron's shareholders equity increased by $100.6 million. Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. at June 30, 2002, was $292.1 million representing 66.2% of Elron's total assets. "Second quarter results were affected by the completion of the merger with Elbit and the share purchase of DEP," said Doron Doron, or Dorio, as it is said to be written in some manuscripts, is a city mentioned only by Pliny and located in Cilicia Tracheia,[1] Some scholars have equted the city to Darieium or Dorieium in Phrygia mentioned by Stephanus of Byzantium. Birger Birger may refer to
adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. environment. Following the merger with Elbit and the share purchase of DEP, our financial position strengthened and we intend to use our considerable cash resources to continue to build and support our group companies." Investors can access Elron's second quarter financial report and Management Report on the company's web site: www.elron.com. Conference call details: Thursday, August 8, 2002 11:00a.m. (EST); 06:00 p.m. Israel To take part in the conference call, please dial: In the US: (800) 289-0437 Other Israel & International Participants: (913) 981-5508 Confirmation #486365 Replay: a digital recording will be available at 02:00 p.m (EST)(the same day) until 08:00 p.m (EST) on Monday, August 12th. To access please dial: In the US: (888) 203-1112 Israel & International: (719) 457-0820 Confirmation:#486365 Elron Electronic Industries Ltd. is a multinational multinational Of, relating to, or being a company with subsidiaries or other operations in a number of countries. The diversity of operations of such companies subjects them to unique risks (for example, exchange rate changes or government nationalization) high technology holding company based in Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. . Through affiliates, Elron is engaged with a group of high technology operating companies operating company A business that engages in transactions with outsiders. in the fields of advanced defense electronics, communication, software, information technology, Medical devices and semiconductors. For further information, visit http://www.elron.com. Any statements in this press release that may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. are subject to risks and uncertainties that could cause actual results to differ materially. Actual results may differ from such forward-looking statements due to the risk factors discussed in periodic reports filed by the Company with the Securities and Exchange Commission, which the Company urges investors to consider.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. Dollars)
June 30, December 31,
2002 2001
---- ----
ASSETS
Current Assets: 131,343 121,799
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Long-term assets:
Investments in affiliated companies 142,099 162,260 (a)
Other investments 107,068 7,504 (a)
Long-term debentures and loans 5,526 6,689
Deferred taxes - 973 (a)
Severance pay fund 1,791 2,313
------- -------
Total long-term investments 256,484 179,739
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Property and equipment, net 12,292 4,971
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Other assets, net 40,921 19,801
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Total assets 441,040 326,310
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities 93,433 30,452
------ ------
Long-term liabilities 52,744 56,105
------ ------
Minority interest 2,774 1,040
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Shareholders' equity
Ordinary shares 9,572 9,567
Capital surplus 267,295 165,680 (a)
Accumulated other comprehensive income 17,403 42,231 (a)
Retained earnings (accumulated deficit) (2,181) 21,235 (a)
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Total shareholders' equity 292,089 238,713
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Total liabilities and
shareholders' equity 441,040 326,310
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(a) Restated
CONSOLIDATED STATEMENTS OF OPERATIONS
(US Dollars in thousands except share and per share data)
For the six For the three For the year
months months ended
ended June 30 ended June 30 December 31
-------------- ------------- -----------
2002 2001 2002 2001 2001
(Unaudited) (Unaudited) (Audited)
-------------- ------------- -----------
Income
Revenues 11,762 19,852 5,856 10,249 32,859
Net loss from equity
investments (15,273) (8,163)(a)(9,593) (5,351)(a)(27,242)(a)
Gain (loss) from
disposal and changes
in holdings in related
companies, net 2,032 (171) 1,892 (27) 3,179
Other income (expenses),
net 284 (2,725) (204) 485 (4,885)(a)
Finance income 1,524 2,720 617 926 5,215
------ ------ ----- ------ ------
329 11,513 (1,432) 6,282 9,126
Costs and Expenses
Cost of revenues 5,829 13,783 2,809 6,949 22,048
Research and development
expenses 4,182 4,799 2,259 2,454 8,979
Marketing and selling
expenses 5,244 5,616 2,806 2,435 10,587
General and
administrative expenses 5,150 5,826 2,789 2,661 11,810
Amortization of other
assets 895 1,962 460 979 3,734
Finance expenses 1,782 2,289 1,107 1,053 3,964
Restructuring charges,
net 2,061 926 2,039 926 2,203
------ ------ ------ ------ ------
25,143 35,201 14,269 17,457 63,325
------ ------ ------ ------ ------
Loss before tax
benefit (24,814)(23,688) (15,701)(11,175) (54,199)
Tax benefit 1,164 2,447 431 27 2,947
------ ------ ------ ------ ------
Loss after
tax benefit (23,650)(21,241) (15,270)(11,148) (51,252)
Minority interest 234 210 115 92 438
------ ------ ------ ------ ------
Net loss (23,416)(21,031)(a)(15,155)(11,056)(a)(50,814)(a)
====== ====== ====== ====== ======
Net loss per share:
Basic per share data -
Basic net loss
per share (1.00) (0.99)(a) (0.59) (0.52)(a) (2.40)(a)
===== ===== ===== ===== =====
Weighted average number
of shares used in
computing per share
amounts (thousands) 23,382 21,189 25,552 21,189 21,191
====== ====== ====== ====== ======
(a) Restated
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